Kraken Rolls Out UK-Only Derivatives—Because Retail Traders Clearly Can’t Handle It

Kraken doubles down on institutional play with a London-friendly derivatives offering. FSA-regulated professionals only—because nothing says ’financial innovation’ like locking out the little guys.

Platform cites ’demand from sophisticated investors.’ Translation: hedge funds needed another playground after blowing up Archegos.

Bonus jab: Finally, a crypto product that won’t get canceled by UK banks—just their customers.

Expanding UK Market with Derivatives

Derivatives play a significant role in the cryptocurrency market, constituting 70-75% of the trading volume. While Kraken’s platform maintains a balance between spot and derivative trading, Theodorou observed that the growth rate of derivatives surpasses that of spot markets.

Kraken’s move in the UK represents a substantial investment in its derivative offerings. These services will be provided through Crypto Facilities, a Kraken-owned FCA-licensed company, on a regulated platform called the Multilateral Trading Facility (MTF). Trades will also be executed via Kraken’s Bermuda-based futures broker.

In 2019, Kraken acquired Crypto Facilities for over $100 million, and in 2020, it became the first crypto company to receive an MTF license in the UK. This platform enables Kraken to offer sophisticated products like perpetual contracts with multiple collaterals. Theodorou emphasized that these contracts provide professional investors a highly capital-efficient method of trading.

These contracts allow trading with different types of collateralized leverage and enable investors to hedge in the spot market or apply market-neutral strategies simultaneously. The company aims to attract institutional investors in key markets like the UK with a more profound and flexible derivative structure.

Global Ambitions in the Derivatives Market

Theodorou pointed out that the crypto derivatives market is still emerging. In stock markets, derivative trades can outpace spot trades by 10-15 times. Nonetheless, restrictive geographic regulations pose a considerable barrier to this growth within the cryptocurrency market. Due to regulatory hurdles, particularly in the US, South Korea, and some European countries, Kraken cannot currently offer its derivative products.

Nonetheless, Kraken has taken strides to expand in Europe. Recently, the company acquired a MiFID II licensed firm in Cyprus and purchased the US-based NinjaTrader platform. These initiatives are expected to pave the way for offering derivatives in Europe and America in the future. Additionally, Kraken has integrated US stocks into its mobile and web platforms, further broadening its offerings beyond cryptocurrencies.

It is reported that the company generated $1.5 billion in revenue in 2024 and is preparing for an initial public offering. Theodorou added that licensing efforts for offering derivatives in other countries would progress according to priority.